Abstract:

This paper examines the causal relationship between oil consumption and economic growth
in the BRICS countries for the period from 1985 to 2011. We employ a panel causality
approach which accounts for both cross-sectional dependency and heterogeneity across
countries. The empirical results support the view that oil consumption and economic growth
are not sensitive to each other for the panel of BRICS countries. Looking at the individual
country results, there is only some evidence for China of a bidirectional causality. The lack of
sensitivity between oil consumption and GDP for the BRICS countries indicates that policies
aiming at reducing the use of crude oil will have minor to no effect on the economic growth
and development of the BRICS countries.